Dow Jones Jumps 549 Points As Treasury Yields Tumble, But Now What? Eli Lilly Leads 7 Bullish Stocks

Dow Jones futures fell slightly overnight, along with S&P 500 and Nasdaq futures. Major indexes rebounded strongly on Wednesday as Treasury yields fell from 12-year highs as the Bank of England resumed bond buying.




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biogenic (IBIB) and its Japanese partner Eisai reported that their Alzheimer’s drug reduced cognitive decline in a late-stage trial. BIIB stock soared 40%.

Eli Lily (THERE IS) hit a buy point on Biogen news. Lilly is working on a similar treatment for Alzheimer’s disease.

Vertex Pharmaceuticals (VRTX) made a bullish move, with Regeneron Pharmaceuticals (REGN). The drug dispenser too Cardinal Health (HAC). DoubleVerify (DV), Energy Cheniere (LNG) and Albemarle (ALB) show a positive action.

Apple (AAPL) sold Wednesday morning after learning it was holding back iPhone production. But AAPL stock closed the session lows nicely. Apple iPhone chipmakers have mostly clawed back few changes.

Stock VRTX and DoubleVerify are enabled IBD classification. Vertex, Albemarle and DV stocks are on the INN 50. Vertex and ALB shares are on the IBD Big Cap 20.

Dow Jones Futures Today

Dow Jones futures fell 0.1% from fair value. S&P 500 futures lost 0.1% and Nasdaq 100 futures fell 0.2%.

Remember that overnight action in Futures contracts on Dow and elsewhere does not necessarily translate into actual trading over the next stock Exchange session.


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Stock market wednesday

The stock market opened mixed but quickly regained momentum, eventually having a clearly positive session.

The Bank of England announced early Wednesday that it would buy long-term UK bonds, a big reverse policy. Yields on gilts had soared in recent days while the pound plunged as new British Prime Minister Liz Truss announced plans for a big increase in borrowing.

The 10-year Treasury yield, which had just topped 4% overnight, fell sharply on the back of the BoE. That, in turn, fueled a long-awaited rebound in the stock market.

The Dow Jones Industrial Average rose 1.9% on Wednesday stock market trading. The S&P 500 index jumped almost 2%. The Nasdaq composite jumped just over 2%. Small cap Russell 2000 jumped 3.2%.

Apple would be put the brakes on iPhone production plans, as the expected increase in demand apparently did not materialize. Tech titan Dow has told suppliers it aims to manufacture 90 million handsets, flat from the previous year. Apple stock ultimately closed 1.3% lower at 149.84 after skidding to 144.84 intraday.

The 10-year Treasury yield fell 27 basis points to 3.7%. In overnight trades, the 10-year Treasury yield briefly hit a 12-year high of 4.005% ahead of the BoE’s bond-buying plan.

The dollar fell solidly on Wednesday, but only gave back some of its big gains of the past few days. The greenback has surged over the past year.

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From best ETFsthe Innovator IBD 50 ETF (FFTY) jumped 3.7%. The iShares Expanded Tech-Software Sector ETF (VIG) increased by 2.2%. The VanEck Vectors Semiconductor ETF (SMH) increased by 1.3%.

SPDR S&P Metals & Mining ETF (XME) jumped 4.6%. ETF SPDR S&P Home Builders (XHB) jumped 4.8%. The SPDR Energy Select ETF (XLE) rebounded 4.4% and the Financial Select SPDR ETF (XLF) climbed 2%. SPDR Healthcare Sector Fund (XLV) gained 2.2%. LLY stock is XLV’s largest holding.

Reflecting more speculative history stocks, ARK Innovation ETF (ARKK) jumped 4.7% and ARK Genomics ETF (ARKG) jumped 6%.


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Stocks to Watch

LLY stock jumped 7.5% to 334.38, topping its 50-day moving average and falling trend line. Intraday, shares hit 341.70, rising above 335.43 flat base buying point before closing in the lower half of its daily range. The relative force line, already at record highs, rose again. Still, spreads struggled in the bear market.

Biogen’s positive drug news for late-stage Alzheimer’s disease is a positive sign for Lilly’s treatment in clinical trials. But how should the market price encourage news for a competitor’s drug, especially given the historic struggles to find effective treatments for Alzheimer’s disease? Still, overall, Lilly’s pipeline appears robust, with analysts expecting massive sales of a new obesity drug.

VRTX stock rose 2.7% to 292.41, clearing its 50-day line and trendline, posting an aggressive entry. Vertex stock has a 306.05 point of purchase from a flat base, depending MarketSmith. The RS line for VRTX stock is at a new high. On Tuesday, Vertex rose 2.9% on positive news for its genetic modification treatment, with Crispr Therapeutic (CRSP), for sickle cell anemia and another blood disorder.

REGN stock climbed 1.5% to 705.42, closing just below a short falling trendline after breaking that level during the day. Regeneron’s stock is consolidating after briefly hitting an all-time high in early September on positive clinical data for its already approved drug Eylea. The RS range is at its highest for two years.

Cardinal Health stock jumped 4.65% to 69.29, breaking a short downtrend and wiping out the 21-day moving average. This extends Tuesday’s rebound from the 50-day moving average. CAH stock could form a new consolidation after rising in July and August.

DoubleVerify stock rose 2.9% to 27.85, continuing to rebound from the 50-day line, albeit in light volume. DV stock offered an aggressive entry in early September, but quickly retreated with the market. The RS line is at its highest level in 10 months.

LNG stock jumped 6.8% to 162.97, returning to its 50-day moving average and 21-day line. Cheniere Energy and other LNG fields look likely to have a long-term growth story.

ALB stock rose 3.1% to 277.95, continuing to find support at the 50-day line. Although technically close to a former buying point, investors may want to see a new base form, or perhaps pause a bit longer before bouncing higher.

Stock market analysis

The stock market finally got a real rebound for a full session. Major indexes rallied sharply on Wednesday in response to falling Treasury yields and a falling dollar. Treasuries reacted to the Bank of England’s decision to temporarily buy UK bonds.

As the Bank of England has shown, central banks can quickly reverse policy when financial markets are under strain. It is therefore possible that the policy of the Fed could, at some point, change abruptly. But the Fed seems comfortable with “just” a bear market and willing to risk a sharp recession.

Either way, the market rebound was not that surprising given the oversold conditions, rising bearish sentiment, and other factors. Major indexes are still at bear market lows. Investors should look for real signs of market strength.

A follow-up day confirming a new rally attempt would be a positive signal, although investors should remain very cautious in such a scenario. A tracking day on one or more of the major indices is still a few days in the future.

In practice, any rebound in the stock market will likely depend on whether Treasury yields continue to fall. But Treasury yields will likely remain in an uptrend as long as the Federal Reserve aggressively raises rates.


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What to do now

It’s been so long since the market had a solid day that investors need to hold back. It’s still a bear market. The main indices are at their lowest. Stocks are at the mercy of Treasury yields, which are at the mercy of the Federal Reserve. But the Fed is adopting a Cobra Kai mentality: “Strike first. Strike hard.

In this environment, investors should generally wait for signs that the bulls are gaining momentum.

If you decide to buy stocks showing buy signals, such as Eli Lilly or Vertex, consider treating them as swing trades, taking partial or full profits very quickly. The risks of a reversal are very high, especially if the market starts to sell again.

A stock market rally attempt is In progress. Investors should therefore work on their watchlists. Focus on relative strength, paying particular attention to stocks above or testing key levels such as the 50-day moving average.

Lily The big picture every day to stay in tune with market direction and key stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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